Global online retailer Amazon is close to launching a major new online operation in Australia which could see thousands of products made available at prices that undercut major retailers by up to 50% claim sources.
The US ecommerce retailer which has established a head office operation in Sydney has already held talks with vendors about their Australian operation which could have a major impact on distributors who represent overseas brands in Australia. ChannelNews has been told that a lot of brands that are represented by distributors will be sourced directly by Amazon and not via a local distributor.
Several vendors have told ChannelNews that Amazon will not source products locally but direct from the manufacture which in some cases involves shipping direct from the plant where a product has been made.
Amazon is believed to have secured warehouse space in Australia that will accommodate 54,000 square feet or 6,000 square metres of storage space.
The site would be part of Amazon’s massive global distribution network. A senior Asia Pacific regional executive for a US storage Company said in Australia yesterday “The 800 pound online gorilla, Amazon is set to flex their muscle in Australia and it will impact local retailers. We have seen what they have done in other markets and they will do the same in Australia. In China, online retailing is now 50% of the market and major consumer electronic and IT retailers are now closing stores all over China because of the impact of online”.
Amazon which recently partnered to deliver their hosting and data services business in Australia yesterday launched its new Amazon Kindle Store, offering 2 million-plus e-books. It also announced local availability of its Kindle Paperwhite, Kindle Fire HD and Kindle Fire HDX tablets.
The tablets are also on sale at Dick Smith and Big W stores.
Online book retailing in Australia is estimated to have been worth $280 million in 2010, according to PriceWaterhouseCoopers. More than half of the books bought online in 2010 were bought from overseas booksellers such as Amazon.
12 months ago Brian Dunn the former CEO of US retail chain Best Buy, told ChannelNews that Amazon will be a serious threat to retailers in Australia. Dunn said that for a period Best Buy suffered because of the impact of the low pricing and good service that Best Buy offered.
“We had to restructure our operation, we had to learn how to compete with Amazon and that included delivering better instore service. We offered comparison shopping where a consumer came instore to see several products side by side and we moved to same day or next day deliveries” he said.
Amazon did not reply to our request for an interview prior to posting this story.